Queensland Shelves Proposed Land Tax Reforms

In welcome news to both property investors and renters, the Queensland State Government has announced that they have decided to shelve the controversial land tax reforms that were set to come into effect from 2023.

In short, for the tax to work effectively, it would have required the other states to cooperate in providing land values for the citizens of their own state to the Queensland revenue office for them to calculate tax liabilities for their own citizens. NSW Premier, Perrottet has already advised that NSW would have no interest in doing this. Simply put, it would require them to put on more staff just for another state to collect additional revenue.

If you’re not already aware of the proposed changes, let’s revisit the originally proposed changes here. From 30 June 2023, to calculate your Land Tax bill, the total assessable land value of your Australian property would have to be included, not just in Queensland. In simple terms, the Queensland Revenue Office (QRO) would use the total value of the taxpayer’s ‘Australian Land’ to determine their land tax liability.

To put this in perspective, here is a simple scenario below:

Existing Scenario

The current land tax-free threshold in Queensland is A$600,000, so under this current environment, if your assessable land value in QLD is A$600,000, then your land tax bill would be nil. It’s important to highlight here, that this is different for companies, trusts, and absentees with different limits applying.

New Scenario

Under the previously proposed changes, which have now been shelved, our total assessable land value would have now been A$1.6M. This changes our tax bracket for land tax and the new calculation is as follows:

$4,500 + (1.65 cents for each $1 above $1M)

= $4,500 + $9,900

= $14,400

This is then apportioned based on the value of the QLD land relative to the overall value as follows:

$600,000 / $1,600,000 = 37.5%

The new tax bill becomes – 37.5% x $14,400 = $5,400

It’s not difficult to see why this is welcome news for investors and renters and should go a long way to reinstating confidence to invest in the state. Had the changes been passed, it would have likely seen many property investors simply avoid the state as an investment destination, which while may not have had any material impact on property prices, it’s likely that it would have certainly reduced stamp duty revenues to the State Government.

With a record low vacancy rate in Brisbane of just 0.7%, properties remaining available to rent for as little as two weeks in most instances, and rental prices rising, the State Government needs to shift its focus to policies that will encourage greater supply, and reduce the burden on renters.

It’s important to note here that the proposed changes have only been shelved, which will allow the State Government to revisit this and perhaps rework their proposed reforms. We remain hopeful that any future amendments to these proposed changes are modeled with greater industry input from the Advisers that are working with investors and the markets on a regular basis.

For now, we remain grateful for the backflip here for both investors and anyone looking to rent in Queensland.

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